The Port Commission cut the rent and added up to $38 million of public money on 14 July 2026 to restart a stalled hotel on the Embarcadero. The vote is the fourth amendment to a lease disposition and development agreement the Port holds with TZK Broadway, LLC. The Board of Supervisors has not voted.
The site and the three components
The development sits on Seawall Lots 323 and 324 and on portions of the unimproved Vallejo Street and Davis Street right-of-ways. The Port’s project page lists three components. The first is a permanent theater for Teatro ZinZanni and its historic Spiegeltent. The second is a 164-room luxury hotel with a ground-level cafe and a rooftop bar. The third is a public park of approximately 14,000 square feet.
The Port’s factsheet, updated in August 2026, describes a 164-room, four-story luxury lifestyle hotel, a LEED-certified building, and the historic Spiegeltent in a glass-walled gazebo.
TZK Broadway, LLC is the project sponsor. Teatro ZinZanni is named as a sponsor on the same line. Hornberger + Worstell is the architect of record. DPR Construction is the general contractor. Ricky Tijani, waterfront development project manager, is the Port contact for the file.
The room count moved
The room count is 164. The figure appears in the Port’s staff report of 10 July 2026 and on the project page. The 2019 approval covered 192 rooms. The staff report states that the hotel remains as proposed and that its room count is now 164 instead of 192.
The senior lender required the brand and management company to guarantee part of the loan. The staff report states that Hilton Hotels has committed to managing and operating the hotel, branded as NoMad.
The rent the Port gave up
The resolution adopts four changes to the lease. Percentage rent falls from the 2019 range of 3.5 percent to 6.5 percent to a range of 2 percent to 4.5 percent. Minimum base rent floors start at $0.5 million a year in lease years one through four and rise to $8 million a year in lease years 51 through 66. The tenant may defer part of the rent when annual hotel gross revenue falls below $60 million, for up to two years. A shortfall against senior debt service allows a deferral of up to three years. Both deferrals are limited to lease years eight through 15 and accrue simple interest at 5 percent. The amendment extends the agreement term by up to nine months, in three-month increments at $25,000 each, subject to approval by the Port executive director.
The staff report prices the change. Nominal rent over the term falls from $433 million to $367 million. The net present value of rent payments to the Port falls from $54 million to $39 million at a 6 percent discount. That is a $15 million reduction.
The gap behind the vote
Port staff and the developer negotiated against a measured shortfall. Increased project costs left a funding gap of approximately $30 million as of mid-2025. A projected $14 million gap remained after the proposed incentive payments. Construction costs had risen from $164 million in 2019 to $182 million. The staff report attributes the increase to labor, materials and financing.
The capital stack totals $182.4 million. Helix debt is $90 million, C-PACE financing $60.4 million, limited partner equity $16.6 million, sponsor equity $9.9 million and EB-5 private equity $5.5 million. The lender closed part of the remaining gap by raising its loan from $60 million to $90 million.
The incentive and who pays
The incentive agreement provides financial assistance of up to $38 million in net present value over 20 years. The staff report states that the amount is a measurement figure, calculated as a percentage of the transient occupancy tax the city actually receives from guest rooms at the new hotel. Port staff will seek appropriation from the city general fund. The Port Harbor Fund is not a source of funds.
What happens next
The resolution authorizes Port staff to forward the revised lease and the incentive agreement to the Board of Supervisors. It authorizes the executive director to execute both documents at close of escrow, after the Board acts and after the conditions in the development agreement are satisfied. The Port has extended the close of escrow to June 2027. The project’s schedule runs construction through 2027 and 2028 and a grand opening in 2029.
No Board vote date appears in the staff report or on the project page. The published record carries no construction start date, no room rate, no room mix and no meeting-space total.